Wegelin Case Highlights Private Banking Changes

As usual, the United States kills the fly with a sledgehammer, as its overkill in approaching what is a justified attempt to get undeclared revenue and unpaid tax, has now made so very many non-US bankers unwilling to offer US securities and other financial products to their clients, for fear that another "sledgehammer overkill attempt" by the US authorities at some future date, for some other reason, may put those investments in peril. Doing business with the US is simply too risky and all dealings are ever more complicated and the compliance costs continue to mount. The global economy is now so vast, so the US market is no longer the only game in town. China, Brazil, India, Indonesia, Australia and others are far more interesting markets nowadays, with rosier futures, better managed economies, less debt and don't go around the world with a sledgehammer in order to resolve disputes. In addition the stupid FATCA law has made US citizens persona non grata throughout the international business world and now banks outside the US don't even want US citizens resident in other countries as clients, potential business partners outside of the US don't want any US citizens in their business ventures, as the IRS demands that the entire non-US business venture, located outside of the US, with other non US partners, reports all of their earnings, bank accounts, results, etc. to the IRS in the US just because there is one US stakeholder in the company holding more than 10%. At the rate they are going there will be very very few businesses with US citizens outside of the US, limiting the USA's global presence in an ever more globalised world. So, that is the price the US economy will pay for the USA's shortsighted, provincial and poor not thought out legislation and the brutal self destructive approach that they take in dealing with their own citizens living, working and paying taxes overseas and in resolving problems with foreign financial institutions.

2:50 pm January 5, 2013

Anonymous wrote:

Possibly what you say may come to pass but if the goal is to eradicate tax evasion and money laundering then stiff regulation is required. Much of the world's violence and repression exists because of lax regulation. A sort of zero tolerance policy is necessary until a dent has been made in the problem. I think it is a small price to pay to rid the world of criminals.

3:54 pm January 5, 2013

Star wrote:

@Anonymous - "Much of the world’s violence and repression exists because of lax regulation." You're kidding, right? The US has become the biggest bully of all terrorising its own citizens who happen to live overseas, while destroying its own economy as described by Peter. The USA happens to be one of the world's biggest tax havens where investors from around the world hide cash while the US turns a blind eye. I used to be against FATCA but now there is a side of me that says 'bring it on!.' I'm going to get a big bowl of popcorn and watch. It's you people living in the States I feel sorry for.

6:10 pm January 5, 2013

Tax Lawyer wrote:

Sadly, many in the US are unaware that their own country, the United States of America, is rated by the OECD and is known by ALL foreign tax professionals as having the world's most opaque tax haven, the State of Delaware, where corporations can register and operate internationally with impunity and without paying taxes to the country where they operate! Delaware is only the worst example. Florida is another, with literally hundreds of thousands of accounts in Florida banks owned by tax dodgers and worse from Latin America in particular. Florida banks gladly accept and shelter their money, money for which no tax has ever been paid to their home countries in Latin America. Switzerland is a kindergarten concerning aiding and abetting tax evasion in comparison to the US. The US has created a real Frankenstein with FATCA, because it will eventually put Delaware, Florida and other banking jurisdictions in the US, who are actively aiding international tax evasion, into the spotlight. Several international lawyers that I have met have clearly said that they are waiting for the moment to demand transparency in Delaware and Florida. It is only a matter of time. Let the US start chasing the world with FATCA, only to see, like Frankenstein, their own draconian law turn on themselves and reveal the tax evasion that has been deliberately and knowingly created in jurisdictions such as Delaware and Florida.

7:37 pm January 5, 2013

Sergei wrote:

The Wall Street Journal writes an article on the fact that bank secrecy is disappearing thanks, according to them, to the efforts that the United States has taken against Swiss banks, here the oldest Swiss bank, Wegelin, that had to close due to the case brought against them of aiding tax evaders. Oddly, they don't once mention the fact, rightly stated in the comment above, that it is in the USA where the highest, certainly in value, amount of sanctioned tax evasion is going on, notably in places like Delaware and Florida. Why doesn't the WSJ journalist even mention the possible repercussions that this new situation may have on those banks in the USA actively courting and hiding billions in untaxed funds and how FATCA will soon put the international spotlight on US banks, in Delaware, Florida and elsewhere, who are even more engaged in aiding millionaire/billionaire private tax dodgers and corporations (in Delaware) than any bank in Switzerland ever was? Only when the WSJ addresses that aspect will I be able to take their journalism totally seriously on this topic.

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